Peel potatoes, rinse and cut into 1/8 inch thick slices (should be about 4 cups. Submerge potatoes in water to keep from browning.
Heat 3 tablespoons of butter in saucepan over low heat unitl melted. Blend in flour, salt and pepper. Cook over low heat, stirring constantly, until mixture is smooth and bubbly.
Remove from heat and stir in milk.
Heat to boiling, stirring constantly. Boil at least 1 minute.
Arrange potatoes in greased 2 quart casserole in 3 layers.
Top each of the first two layers with 1/2 of the onion and 1/3 of the white sauce. Top the last layer with remaining potatoes and sauce. Dot with the 1 tablespoon of butter.
Cover and cook in 325° F. oven 40 minutes. Uncover and cook until potatoes are tender, 60 to 70 minuters longer.
Let stand 5 to 10 minutes before serving.